Top Ten Pros and Cons Between Buying and Renting
It can be a difficult decision to make; on the one hand you relish the idea of not having to write out a check to your landlord every month, but on the other, you're worried about what would happen if interest rates rocket and the bottom falls out of the housing market. It's wise to spend some time weighing the pros and cons before deciding whether the time is right for you to jump onto the property ladder.
Other People Are Reading
-
Equity
-
Once you've secured a mortgage on a property and start paying down the principle of your loan, you'll be moving closer to owning your home outright. You'll also profit from any increase in the value of your property, but could face a loss and negative equity if the property market tanks. If you're renting, all the money you spend on rent goes into your landlord's pockets.
Liable for Upkeep
-
A major advantage of renting is the fact that you're not responsible for the upkeep of the property you live. If something breaks and it's not your fault, all you have to do is call your landlord or property management company to report the problem. If you own your home, you'll have to arrange for things to be put right yourself and meet the cost if anything goes wrong.
Security
-
As long as you keep up with your mortgage payments, there's next to no chance of being evicted from your home if you own it. Renters on short-term contracts face the constant threat that their tenancy agreement may not be renewed, that their landlord might decide to throw them out, or that their rent will be raised when the current lease expires.
Mobility
-
If you've bought your own place, moving is a big deal. You need to put your home on the market, find a new property, arrange a new mortgage, and pay a range of taxes and fees. Renters can move on with relative ease. If you're a tenant, all you need to do is wait until the end of your contract and start looking for somewhere else.
Deposit
-
Securing a cheap mortgage deal requires a large deposit. Even if you only need to put down 5 percent of your new home's value, that means you'll have to find $15,000 to qualify for a $300,000 mortgage. Renters, on the other hand, can sometimes get away with paying a deposit equivalent to one month's rent before moving in.
Interest Rates
-
Fluctuating interest rates will be a constant concern once you've bought your own house. You'll be charged with the almost impossible task of predicting the Federal Reserve's next rate move and be forced to make the difficult decision between paying for a fixed-rate mortgage or sticking with a cheaper adjustable deal. If you rent, you know that you'll be paying a flat rate for your housing costs over the life of your tenancy agreement.
Restrictions
-
Many landlords place restrictions on what you can do in your rented accommodation. Some disallow pets, others don't like smoking, and a few insist that you don't have any guests around. If you've bought your own place, you're free to do as you please in it — within the limits of the law, that is.
Interior Design
-
When you're renting, it's very difficult to put your own personal stamp on your home. You can't decorate without your landlord's permission and won't be able to make any structural alterations to your property.
Privacy
-
Many landlords or their agents insist on inspecting rental property from time to time. Although this usually happens infrequently, it can be intrusive and frustrating when it does take place. If you own your own home, there's nobody checking up on you.
Community Life
-
Buying your own place allows you to lay down roots in an area, whether it's getting to know other parents at the local school if you have kids, joining the local sports club, or regularly drinking coffee with neighbors in your neighborhood cafe. This kind of lifestyle isn't for everybody, though. Many tenants actually enjoy the anonymity of living in rented accommodation, or need to have the freedom of housing that will only be for a limited period of time.
-
References
- Photo Credit Goodshoot/Goodshoot/Getty Images
